A Tale of Two Publishers • Page 2

Compare that with Activision, whose financials noted that aside from World of Warcraft, the bulk of its revenue came from the Xbox 360 platform. The PS3 came in a fairly distant second place (EA, by comparison, sold more on PS3 than on Xbox), with the Wii trailing in the distance, accounting for just over half the revenues of the Xbox 360. Even more dismal were the PC figures - WOW aside, the PC took just $41 million for Activision Blizzard, less revenue than the venerable PS2 managed.

These figures demonstrate two very different businesses, which continue to compete with one another - but whose core values are obviously diverging in some important respects. EA is struggling with the transition to self-owned IP, where Activision controls franchises like Call of Duty and Warcraft - but EA is quickly learning how to capitalise on the market expansion created by the growth of the Wii, the casual market, the expanding female game demographic and the explosion of the mobile sector. Activision has properties which appeal to that space, but its line-up remains focused on the core market.

Of course, remaining focused on the core market is by no means a bad idea. It's a common fallacy to assume that the expansion of the market into new areas somehow diminishes the value of what came before - the reality is that there are still tens, if not hundreds, of millions of consumers who want core market games of some kind. Their tastes may be diversifying, just as the market itself is diversifying, but the 16-30 male demographic shows no signs of evaporating overnight.

In this regard, the fascinating part of this chapter in the EA/Activision story is not that Activision is maintaining its lead - it's that both companies are successful (even despite a dip in EA's figures), and are achieving that success in markedly different ways. Five years ago, it seemed that there was only one path to becoming a top-flight publisher - achieved largely through dominance of the licensed, boxed-game market on consoles. Today, it's clear that multiple different models for success exist, and as revenues from sectors like mobile and web games continue to grow, those models will diversify even further.

The fabled "mass-market", I've argued before, is nothing more than a collection of niches - address enough niches and you're suddenly a mass-market company. As a result, the "my dad's bigger than your dad" battle for publisher supremacy is becoming obsolete.

Both Activision and EA are demonstrating that the real challenge is achieving success in a diversifying market - which means taking the lead in the market sectors you're good at rather than trying to find some unifying strategy that will allow you to lead the entire industry. Rather than concerning ourselves with the bottom line, it will be much more interesting, in the coming months and years, to watch which niches these two giant companies choose to focus on. We may even reach a point where companies like EA and Activision can co-exist in the games industry without directly competing with one another at all.

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